Public Spending Cuts Impact Social Programs, Education, and Infrastructure in Mexico
In an effort to reduce the fiscal deficit by the end of the year, Mexico’s Ministry of Finance and Public Credit (SHCP) implemented significant cuts in programmable spending during the first half of 2024. These cuts have mainly affected social programs managed by the Ministry of Welfare, the Ministry of Public Education (SEP), as well as investments and supplies for Petróleos Mexicanos (Pemex). This measure is aimed at offsetting the decline in oil revenues and unstable tax collection, particularly due to lower-than-expected performance in the Special Tax on Production and Services (IEPS).
Official figures report that from January to June, total public spending cuts amounted to nearly 287 billion pesos, with more than 97% of this affecting programmable spending. Among the most impacted sectors are education, with a reduction of 27.85 billion pesos compared to the approved budget, and key social programs such as the Pension for the Wellbeing of Senior Citizens, Sembrando Vida, and support for people with disabilities, which saw downward adjustments totaling just over 40.9 billion pesos.
In the energy sector, Pemex has experienced a significant reduction in resources allocated to infrastructure, general services, and material acquisition. This context reflects the need to cope with lower international oil prices and a tighter financing environment. Similarly, the Ministry of Infrastructure, Communications, and Transportation (SICT) cut funding originally allocated to rail development and projects for the modernization and rehabilitation of highways.
According to specialists like José Luis Clavellina from the Center for Economic and Budgetary Research (CIEP), this type of adjustment—though aimed at stabilizing public finances—can have adverse effects on both economic growth and the quality of public services by reducing access to essential goods and services for the population. Additionally, these cuts are often reflected in decreased local economic activity and in public perception regarding the government’s fulfillment of its promises.
On the other hand, some areas have received additional funding, including the Mexican Social Security Institute (IMSS), the Ministry of Foreign Affairs (SRE), the Ministry of the Interior, and the Federal Electricity Commission (CFE). At the IMSS, the increase is explained by higher pension demand, reflecting an aging population and mounting pressure on the social security system. Meanwhile, the SHCP has allocated more budget to customs control and migration services management—strategic areas given rising migration flows and the need to strengthen tax collection.
The restrictive fiscal policy adopted by the Mexican government takes place within a challenging international context, marked by volatility in energy markets, slower global economic growth, and increased pressure on public revenues. For next year, reforms are planned to improve tax collection efficiency, especially in customs, as well as adjustments in the design and implementation of economic policies to maintain fiscal balance without neglecting the basic needs of the population.
In summary, spending adjustments reflect the challenge of balancing the goal of fiscal discipline with society’s demand for services and well-being. While the measure is intended to clean up Mexico’s public finances, it will be key to monitor its impact on the real economy and the well-being of the most vulnerable sectors, especially amid a slowing economy and persistent structural challenges.
Looking ahead, the government’s ability to balance financial and social priorities will be crucial to avoid substantive harm to key sectors and to lay the foundation for a sustainable recovery. Closely monitoring spending and revenue performance will be essential not only to ensure macroeconomic stability but also to promote inclusive development.
